Vega v. Chattan Associates, Inc., 921913

• Decision Date: 17 September 1993
• Docket Number: No. 921913,921913
• Citation: 435 S.E.2d 142,246 Va. 196
• Court: Virginia Supreme Court
• Parties: Guillermina VEGA, et al. v. CHATTAN ASSOCIATES, INC. Record

Page 142

435 S.E.2d 142

246 Va. 196

Guillermina VEGA, et al. v. CHATTAN ASSOCIATES, INC.

Record No. 921913.

Supreme Court of Virginia.

Sept. 17, 1993.

Mary M. Jolma, Alan S. Toppleberg (Raymond B. Benzinger, on briefs), for appellants.

William P. Daly, Jr. (Rees, Broome & Diaz, on brief), for appellee.

Present: CARRICO, C.J., COMPTON, STEPHENSON, WHITING, HASSELL and KEENAN, JJ., and POFF, Senior Justice.

CARRICO, Chief Justice.

In this dispute involving a contract for the sale of land, the trial court entered judgment upon a jury verdict in favor of Chattan Associates, Inc. (Chattan) against Guillermina Vega (Vega) for $11,325.05 and against Russell Lamay and Yvonne Lamay (the Lamays) for $11,500. Finding no error in the judgment, we will affirm.

Under a contract dated November 17, 1989, Chattan agreed to purchase a tract of land containing approximately two acres, composed of one parcel owned by Vega and another owned by the Lamays. Upon execution of the contract, Chattan paid deposits of $8,000 to Vega and $4,000 to the Lamays. An addendum to the contract provided for settlement no later than March 31, 1991.

The contract was subject to several conditions precedent, including "Sellers having received final approval from Fairfax County for subdivision of the subject property," "Sellers getting approval from the Fairfax County Health Department for a five ... bedroom percolation site," and "the obtaining of financing acceptable to [Chattan]." The contract also contained provisions stating that "[i]n the event [the] contract is declared null and void due to [certain] circumstances ..., Sellers will reimburse Purchaser" for the deposits it had paid and "any other costs" it might have incurred in preparation for improving the land.

An approved subdivision plat was recorded on February 28, 1991. However, on March 22, 1991, Chattan notified Vega that the contract was, by its terms, null and void because of Chattan's inability to obtain acceptable financing, and on April 1, 1991, Chattan notified the Lamays to the same effect. ¹

Chattan made demand upon Vega and the Lamays for return of the deposit money and for reimbursement of the improvement costs it had incurred. When Vega and the Lamays refused Chattan's demand, this litigation ensued. The jury awarded Chattan the full amount of the deposit money and the exact sum claimed for improvement costs.

Vega and the Lamays (collectively, the defendants) first contend that Chattan is barred from recovery because it has maintained throughout this litigation that the contract became null and void when it invoked the condition precedent relating to financing, yet it seeks to enforce the agreement through an action for breach of contract. ² The defendants argue that "[a] contract which fails for the failure of a condition precedent to be met is a void contract and the parties are relieved of the obligations under it." Continuing, the defendants say "[i]t is well settled that a contract which is null and void cannot be enforced."

We disagree with the defendants. The determinative question here is whether the deposit-refund and cost-reimbursement provision of the contract is severable from the provision permitting a declaration that the contract is null and void. Whether contractual provisions are severable is determined from the intention of the parties. Eschner v. Eschner, 146 Va. 417, 422, 131 S.E. 800, 802 (1926).

From a consideration of the contractual terms outlined above, it is obvious the parties intended that the provision relating to deposit refund and cost reimbursement would be severable and would survive the contract becoming null and void according to its terms. To read the contract otherwise would render the deposit-refund and cost-reimbursement provision meaningless.

The contract is to be construed as a whole, and "[n]o word or clause is to be treated as meaningless if any reasonable meaning consistent with the other parts of the contract can be given to it." Ames v. American Nat'l Bank, 163 Va. 1, 39, 176 S.E. 204, 216 (1934) (footnote omitted). Treating the deposit-refund and cost-reimbursement provision as severable gives meaning and consistency to the entire contract.

The defendants next contend that Chattan is not entitled to recover because the events specified in the contract that would trigger the defendants' obligation to refund deposit money and reimburse development costs did not occur. In a portion of the contract that may be termed the "null and void clause," it is provided as follows:

In the event this contract is declared null and void due to circumstances which hold the Purchaser not in default, as provided for elsewhere in this contract, Sellers will reimburse Purchaser for all monies disbursed by Purchaser for Lot purchase, and, as provided for elsewhere in this contract, for any other costs necessary to obtain Fairfax County approval of a five (5) bedroom percolation site and survey and engineering costs incurred to sub-divide and record subject lot. Purchaser is to be reimbursed within one hundred and twenty (120) days of this contract being declared null and void.

The defendants say that in only two situations is their liability to refund the deposit money "provided for elsewhere in [the] contract": (1) when the contract is declared null and void because of a defect in title that cannot be remedied by the sellers at an "expense ... not to exceed Ten Thousand Dollars"; and (2) when the contract is declared null and void based upon the existence of "easements, covenants, conditions, rights-of-way, or restrictions of record which will ... prevent the Purchaser's intended development and/or use of the property." The defendants maintain there was no evidence...